Posted by: nickgerlich | November 10, 2007

Retail Graveyard

Yesterday’s blog spurred a number of interesting replies from my students. Some said that Macy’s was wrong to ript the heart out of Chicago shoppers, while others said that Chicago should just get over it. And still others waxed nostalgic about shuttered stores in their own hometowns.

Which, of course, got me to thinking. I get paid to do this, remember.

The retail landscape is littered with the memories of fallen storefronts. Exterior walls often bear fading labelscars, the residue of old signage ripped from the facade when the place went out of business. Some stores went out of business because of pressure from the giant Wal-Mart, while others were either gobbled up by conglomerates and rebranded (like Field’s becoming Macy’s), or simply expired for other reasons.

There are distinctions to be noted, of course. In the department store industry, consolidation has been the method of madness for over 25 years. For example, Associated Dry Goods acquired Indianapolis-based L.S. Ayres in 1972, which was then acquired by May Stores in 1986, which was then acquired by Federated in 2005. All Ayres stores are now Macy’s (just like Field’s, which came to Federated via May, and before that from Dayton-Hudson, which is now the Target Corporation).

Confused? I was. I had to read through this stuff a couple of times before it all made sense. And I grew up around Field’s and Ayres.

In contrast to how Federated has conducted its business, grocery chains like Kroger, Safeway, and the former Albertson’s chain (before their split in 2006) bought many regional supermarket chains, yet kept the local names intact rather than switch over to their corporate name. Why? Probably because they were wise to realize that those local names still had values in the mind of consumers. Never mind that it dealt with products we put in our mouth. If you have been buying your groceries from City Market or King Sooper since childhood, you would have a hard time trusting the Kroger name with your meat and groceries (even though Kroger owns both of them).

We also must note that Wal-Mart’s sprawl came about not through acquisition, but rather an engulf and devour strategy. It strategically encroached on communities and built its presence to the point that many smaller stores simply forgot how to compete.

W.T. GrantAnd then there are the chains that simply gave up the ghost of their own accord. Ayres was actually one of the first to recognize the emerging discount sector, and opened Ayr-Way. Jewel Foods (later bought by Albertsons) opened Turn Style, another discounter. The latter eventually flopped, while the former was sold to Target. But perhaps the two better-known chains that served large portions of the US in the 1960s and 1970s were W.T. Grant and E.J. Korvette. These retailers were powerful players in their time, with Korvette having both a grocery and dry goods (sound familiar?), and Grant stocking everything from clothes and motor oil to its own private-branded home appliances and furniture.

I am most familiar with the story of W.T. Grant, although my family shopped at both stores. While Grant started out primarily as a dime store competing against Kresge, it evolved into a suburban superstore with about 1200 stores at its zenith. Grant fell into trouble in the early-1970s for a number of reasons, including their move into private-branded appliances and electronics, as well as a foray into furniture. Apparently they did not understand that the words “discount store” do not lend themselves well to certain durable consumer products. Sales began to plummet, so the chain started offering credit card accounts to every customer possessing one critical attribute: They had a pulse.

Who needs a credit rating when breathing counts as an 850?

While it is easy to perform post-mortems, Grants basically imploded. K-Mart (also known for some last-gasps lately) benefitted from the demise of this competitor, while Wal-Mart and Target were slowly building their empires.

The list of defunct retailers in the US is long, and certainly elicits memories and perhaps even tears in many shoppers. If anything, we are all left with the irrefutable truth that change happens, and that prosperity is never guaranteed for anyone or any company.

As a stroll down memory lane, I encourage my students to reminisce about the fallen retailers from their youth, as well as add some pics from images.google.com. And while you’re at it, be sure to store up some memories for your grandkids. You never know how long Dillard’s, Kohl’s, or J.C. Penney will be around. Anyone remember Builders Square?

Dr “Micro Evolution Can Be Painful” Gerlich

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